Danish Government Proposes Implementation of EU Pay Transparency Directive
The Danish government has submitted a bill to implement the EU Pay Transparency Directive for public consultation. Under the proposal, the new rules would not take effect until 1 January 2027, despite the directive originally requiring implementation into Danish law by 7 June 2026. This delay is intended to give employers more time to adjust salary structures, HR processes, and data systems to meet the new requirements.
Key Elements of the Proposal
The bill introduces extensive amendments to the Equal Pay Act. Employees will gain an individual right to receive information about their own salary as well as average salaries by gender for employees performing the same work or work of equal value. Employers will also be required to ensure transparency regarding the criteria used for setting and developing salaries, which must be objective and gender-neutral.
The proposal also introduces mandatory systematic salary data collection and reporting.
Employers with at least 100 employees must produce a pay report analyzing gender pay gaps within each employee category, broken down by base salary and supplementary or variable components. This reporting must reflect the employer’s categorization of employees based on the performance of the same work or work of equal value.
Companies may seek assistance from Statistics Denmark or an employer organization to prepare the pay report. A report based on Statistics Denmark’s standardized salary data can be used if the dataset meets requirements for gender-segregated reporting and sufficient comparability between employee groups. Reports produced by Statistics Denmark rely on DISCO and job status codes. Reports provided by Statistics Denmark or employer organizations will cover only employees paid by time worked; for employees with other compensation models, the company must prepare its own report.
If the national statistics do not provide a sufficient basis for assessing pay differences—for instance, due to overly broad job categories, limited data, or an inability to compare genders—employers must prepare a supplementary or independent pay report using internal salary data. Employers are also responsible for creating a report if Statistics Denmark’s data does not reflect the company’s employee categories.
Where pay reports reveal unexplained gender pay gaps exceeding the 5% threshold, a joint pay assessment with employee representatives must be conducted. This process serves both documentation and enforcement purposes, ensuring identification, analysis, and, if necessary, correction of pay inequalities.
Variable Compensation
The bill clarifies that “salary” should include not only base pay but also supplementary or variable elements, in line with EU Court of Justice case law. This encompasses benefits beyond standard wages that employees receive directly or indirectly in cash or kind.
This broad definition suggests that realized economic benefits—not merely the potential for a bonus—should be included in pay calculations. Stock-based incentive schemes are also covered if they confer tangible financial value to employees, though valuation and timing may require further clarification in practice.
Establishment of a National Equal Pay Institute
The proposal also calls for a new national oversight body, the Labour Market Institute for Equal Pay, to strengthen and uphold the principle of equal pay. The institute will support individuals subjected to pay discrimination, conduct independent investigations, and publish reports and recommendations on pay gaps and data practices across public and private sectors.
As a supervisory authority, the institute will raise awareness of the right to equal pay and transparency, analyze causes of gender pay differences, develop assessment tools, and collect and publish salary data. It will receive employers’ pay reports and joint pay assessment reports, as well as compile information on cases of pay discrimination handled through labour courts and the judicial system. Employer-provided information will be published within one month and will allow comparisons of pay across sectors and regions.
Next Steps
The public consultation period runs until 23 March 2026, the day before the general election. The new rules will impose significant requirements on companies’ salary structures, documentation, and internal processes. Companies are encouraged to begin assessing their readiness for the new requirements—both legally and organizationally.
Advisory services are available to support adjustments to salary structures, risk assessments, and planning for effective and compliant implementation.
Read more about the bill here:
